FERC Issues Order No. 1000

On July 21, 2011, the United States Federal Energy Regulatory Commission (FERC) issued a landmark policy order that has the potential to create opportunities for grid-scale renewable projects as well as smaller scale distributed generation, energy efficiency investments and other "non-wires" alternatives to the construction of new transmission facilities. Order No. 1000 will accomplish these goals through significant changes in the way that interstate electric transmission companies plan to meet their system needs and in the manner that they allocate costs to their customers. According to the Commission, its existing regulations are "inadequate to ensure that public utility transmission providers in each transmission planning region, in consultation with stakeholders, identify and evaluate transmission alternatives at the regional level that may resolve the region's needs more efficiently or cost-effectively." Order No. 1000 requires each "public utility transmission provider" to: work within its transmission planning region to create a regional transmission plan that identifies transmission facilities needed to meet reliability, economic, and public policy requirements." Furthermore, each plan must "include fair consideration of lines proposed by nonincumbents..." The 620 page order can be found at the following link: FERC Order 1000.

According to FERC Chairman Jon Wellinghoff, "Of the total miles of additional bulk power transmission, 50 percent is needed for reliability. An additional 27 percent will be needed to integrate variable and renewable generation across North America. The remainder is for integration of hydro, fossil-fueled and nuclear generation and to reduce congestion, which can lower the delivered costs of power to consumers. As the Final Rule notes, the existing transmission system was not built to accommodate this shifting generation fleet. Another emerging factor is increasing interest by developers of transmission projects to focus on innovative solutions to transmission needs, independent of generation and retail distribution businesses.It is essential that the Commission's transmission planning and cost allocation requirements are adequate to support more efficient and cost-effective decisions moving forward. The enhancement to those procedures that we require today will promote efficient and cost-effective transmission planning and the fair allocation of costs for new transmission facilities. These changes will provide consumers with greater access to efficient, low cost electricity."

Order 1000 will lead to a flurry of industry activity to implement its requirements. Every transmission utility will need to participate in a regional transmission planning process and submit a filing to show how it is in compliance with the requirements of the Order within 1 year of the effective date, with interregional compliance filings due within 18 months.

As result of Order No. 1000, utilities, independent generators, suppliers and developers of renewable technologies, merchants transmission providers, and end-users have something at stake. In addition, natural gas suppliers and generators and storage projects that can provide alternatives to transmission or support integration of intermittent renewables, also have significant interests in the new regulations. However, while the generic rule is a positive step forward, the real test will be implementation of the new rules on a system by system basis. Therefore, it is imperative that all alternatives to transmission are considered in these proceedings and that the cost allocation process does not discriminate against non-incumbent transmission providers.

If you have any questions about Order No. 1000 or an interest in the proceedings that will implement the Order's requirements please contact us at info@localpower.org.